Consumer chief issues credit-card debt warning

A LEADING consumer advocate has urged credit-card customers who cannot pay off their debts at the end of the month to reconsider having a card at all.

The call from Consumers’ Association of Ireland chief executive, Dermott Jewell, comes following confirmation that credit card companies made profits of €142 million in Ireland last year.

The profit level was up by €7m on the previous year, making Ireland one of the most profitable in the world.

These findings were contained in a survey carried out by British-based research company, Lafferty, with the credit card companies making an average profit of €66 per card last year.

Mr Jewell said the term “credit card” was itself a misnomer, and that cards were just debt facilities, which consumers should think hard about using.

“The golden rule with credit cards has always been that if you can’t pay it off at the end of the month, then you’re wasting money and losing money and you have a debt problem.”

He pointed out that the typical interest rate for balances which remain unpaid after a month is between 12% and 16%, hence the high profit margins being enjoyed by the credit card companies.

Mr Jewell added: “The difficulty therein is that, if you look at Ireland, we have got an ever-increasing proportion of our population who have got credit cards, who are using them and who can’t clear the balance at the end of the month.

Mr Jewell also accused credit card companies of facilitating such levels of debt by offering customers “ridiculously low” minimum monthly payments, which leave larger residual debts that build up over time.

However, the consumers’ representative also urged people to shop around and avail of the offers of 0% on existing debts when changing to a new company, while some companies also allow a six-month, interest-free introductory period.